Australia's Arrow Energy has accepted an improved takeover offer of A$3.44bn (£2.1bn) from Royal Dutch Shell and PetroChina.

Under the new terms, the CS CSG joint venture will pay A$4.70 (£2.85) per share in cash, rather than the A$4.45 (£2.70) that was refused earlier this month. Arrow's international operations are not part of the deal.

"This transaction crystallises the value of more mature assets that have been built in Arrow's Queensland business," said John Reynolds, the chairman of Arrow Energy.

The draw for Shell and PetroChina is Arrow's coal-seam gas (CSG) assets. CSG is a fast-growing business in Australia and is central to the vast liquefied natural gas (LNG) industry supplying thirsty Asian markets. Arrow's CSG reserves are scheduled to produce 16 million tonnes of LNG per year once they are up and running. Once the takeover goes ahead, they will be combined with Shell's nearby CSG reserves and its site for a proposed LNG plant on Curtis Island.

The deal is a massive boost to Shell and PetroChina's positions in Australian CSG, following similar asset acquisitions by rivals such as BG Group and ConocoPhillips over the past 18 months. Malcolm Brinded, an executive director at Shell, said: "This transaction combines Shell's global LNG expertise, PetroChina's operational experience, and our access to regional gas markets."